Innovate or Perish: Vinay L Deshpande

Indian high-technology for the world!
Innovate or Perish
Vinay L Deshpande
Chairman & CEO, Encore Software Ltd
India Emerging Bangalore Management Association 10 September 2005
Overtaking the G6
When BRICs' US$GDP Would Exceed G6
Overheard
India has always had a lot of potential; But unless Indians wake up, India will continue to only have potential!
Did you know?

India is the largest producer of milk and sugar in the world?

yet, Europe produces the largest amount of milk chocolate in the world!
India is the second largest producer of fruits and vegetables in the world?
yet, 40% of it is wasted due to improper transport and storage!
Networked Readiness Index

World Economic Forum -- over 90 factors considered
1. Number of Scientists & Engineers 2. Quality of Mathematics and Science 3. Quality of Scientific Research Institutes 4. Foreign Technology Licensing 5. Level of Technology Absorption
Networked Readiness Index 2

Numbers indicate rank among 102 countries
India has
Third largest resource of Scientists & Engineers (after Finland and Japan) Higher quality of Maths and Science Training (14)
Better than US(37), UK(43), Germany(53), China(46)
High quality of Business Schools (8)

(after US, France, Canada, Switzerland, UK, Finland, and Sweden)
Reasonably high standard of Sci Research Institutions (20)
Think about it
Yet, India has

A high rate of Foreign Technology Licensing (6)
China: 70
A low rate of Technology Absorption (31)

China: 38
This is a ticket to DISASTER for our Human Resources (Waste, Disenchantment) Economy
Think about it 2
BRAIN DRAIN ranking (based on percentage of population that

almost always remains in own country)
2 Finland
51 China 65 India
UTILITY PATENTS ranking

7 Finland
54 India 55 China
HIGH-TECH MANUFACTURED EXPORTS ranking

8 Finland
44 China 82 India
The Only Way Out
INNOVATE OR PERISH!
Encourage and nurture Innovation

No innovation: economic growth limited

by physical resources available to marginal returns on employed capital
Best way for any country to break out of marginal returns is Innovation. e.g., US economy has bounced back in the past few years to very strong health, owing to Innovation.
Priority One
Create an attitude for innovation
India : Tech Leader or ?

Why is it that India is by far the least innovative of all 'tech' countries? How can we say we will be the technology superpower without innovating anything? Is drudgery and grunt-work alone going to make India the 'Tech Champ' of this world?
-- TechTree (e-zine), February 7, 2003
But, Im Not Creative

Yes, you are. We all are. We just need to think what others have not thought
The task is not so much to see what no one has yet seen, but to think what nobody has yet thought about that which everyone sees.
Arthur Schopenhauer
Dont be afraid to stumble

If out of 100 ideas, you get one that works, that is enough!
God dont make mistakes -- thats how he got to be God

(Archie Bunker)
Innovators do make mistakes lots of them

thats how they learn! Thomas Edison 50,000 experiments to develop a new storage battery!
We should not let past failures frighten us Follow the crowd and you will never be followed by a crowd!
A person who walks in anothers tracks leaves no footprints Go against your own instincts sometimes
Innovation in India
STD / ISD / PCO Booths

Uniquely Indian solution for uniquely Indian need
CHOIS
Internet access, too.

300 homes in Jamnagar 100,000 homes in the metros over the next four months 50 million homes in two years!
Uniquely Indian solution for uniquely Indian need
Innovation in India 2
Godrej
Electronic typewriters to Adler C-DAC
GIST PARAM
TVSe Tamil POS Tejas Networks

State-of-the-art fibre-optic networking products
WeP Peripherals
Entire profit on account of peripherals indigenized through local design and innovation
Innovation in India 3
Indica / Reva
Both on UK roads now
ASIEO
LCA Mission Computer Dhruc, LCA, Saras
The Simputer
Creating a new market Selected by Time magazine in June, 2002, as one of the Ten Technologies for You and the Planet
The Mobilis and SofComp

Affordable computers for everyday use
Dont be discouraged by detractors

A certain portion of the populace will always reject new ideas outright
Early horseless carriages you cant get people to sit over an explosion!
Others are willing to experiment, but lose faith or interest quickly when setbacks occur
Mrs. Fish, in the 1900s
Visionaries are able to see past the problems and appreciate the promise of new technologies
Henry Ford: first handmade car $ 9,000 model T $ 800 eventually, $ 284, built 15 million, changed America forever!
Opportunities for India

High level of design expertise Fast becoming the source for a range of chip designs Fast growing domestic market Availability of professional & skilled manpower Experienced & enlightened leadership NRIs in key positions in US companies
Priority Two
Make
Design / Innovation / Technology

Key elements of national strategy
Design / Innovation / Technology

Key elements of national strategy Indian high-technology for the world!
Technology: tool for faster economic growth No innovation: economic growth limited
by physical resources available to marginal returns on employed capital
Best way for any country to break out of marginal returns is Innovation.
e.g., US economy has bounced back in the past few years to very strong health, owing to Innovation.
Conventional Markets for Indian IT Companies

Software services for foreign clients

most of Indias software development effort goes towards productivity and competitiveness improvements of other countries -- USA, Europe, Japan, etc
Domestic hardware and software sales The unique needs of Indian society have been largely un-addressed.
Time to be Unconventional
Indian high-technology for the world! The task is not so much to see what no one has yet seen, but to think what nobody has yet thought about that which everyone sees.
Arthur Schopenhauer
Time is now ripe for societal needs in India to become a new driver of markets for Indian IT companies Think laterally; think out-of-the-box Unconventional thinking will generate strategy not in terms of Hardware or software, but solutions.
Facts to ponder over

USA: 70% of overall growth is through new product development US companies spend more than $250 bn each year on R&D Copyrighted material contributes more than $400 bn to the US economy and is their single most important export
Compare our $17 bn of software services export with that!
Priority Three
Initiatives for development of indigenous solutions for product requirements

uniquely Indian products for uniquely Indian needs. Advantage: Additional markets in the Third World.
Examples of Applications
HEALTH SERVICES Foetal Monitoring (Portable Ultrasound) Telemedicine

Telediagnosis Test samples collection and coordination for remote areas
Clinical Decision Support System Patients bedside clipboard Health Statistics
More applications for the Indian Market

Mobile banking
Bank officials, customers thrilled with anytime, anywhere banking
Crop data collection

Real-time data on standing crops feasible Time, Date, and GPS stamp
Health statistics collection

Time, Date, and GPS stamp
Electricity Billing Ration-shop inventory control
Priority Four
Facilitate IPR Protection
The Age of INTELLECTUAL PROPERTY

Aim to create IP rather than skinware Develop products for local needs, keeping in view the world as our market
Design contracts
New products creation Adaptation /Customization
Govt. can help create large public markets

Individual project success: low probability High need for interacting disciplines Times to payoff: too long
The question is not whether government has a role in fostering innovation and wealth-creation, but where and how it can participate more effectively
US Government Support to Some Industries

Industry Examples & Modes of Government Support Basic Maths research, military R&D, encryption, language standardization, military purchases of systems, IP rights, interface standards Basic research, large-scale development, first purchase, software support, component development, mass-market development through education Current Market Size ($ b)
1. Software
>180
2. Computers
>300
3. Semiconductors
Materials research, first quantity purchase, military research, Sematech, advanced system development, largescale system deployments
>150
Public / Private Partnership

Mission mode projects to stimulate industry

Smart-card based multi-application Citizen Card Electronic Commerce Wireless Reconfigurable microprocessor chip DNA chip Biodiesel
Promote Industry-Academia partnership

Uniquely Indian solutions for Uniquely Indian needs
R&D for Defence / Public Sector

Commit production orders in addition to R&D contracts for new IT products

IP must be given due recognition Government funded development projects IPR first rights to developer
US example: NSF, NIH, DOA
Recognition for IP
Encourage capitalization of IT product development expenses, and recognize them as true assets (Intellectual Property) Allow income-tax exemption on export revenue from royalty on IP Preference in government procurement to indigenous-developed products.
Encourage financial institutions to finance creditbased product exports, against the sole security of the export goods
GOVT. SUPPORT FOR INNOVATION

RBI Rules
Export receivables Return of exported goods incompatible with Distribution Channels requirements (90 - 180 days credit; return of unsold goods)
Simplify / Eliminate anachronistic provisions of FERA/FEMA, RBI, Enforcement Directorate regulations. Encourage financial institutions to finance credit-based product exports, against the sole security of the export goods. Facilitate local availability of input material(s)
Permit stocking distributorships for imported components Permit air-courier services to
Be Customs- cleared at any metro ports. Apply all CD exemptions available to EOU/EHTP/STP units.
GOVT. SUPPORT FOR I.T. INNOVATION 2

Encourage development of appropriate infrastructure

Permit stocking distributorships for imported components Permit air-courier services to
carry samples, quick-turn-around PCBs, etc. no insistence on customs clearance only at gateway ports. all CD exemptions available to EOU/EHTP/STP units.
FINANCE FOR I.T. INNOVATION

The bank never gives you money when you need it, and you dont need the bank when youve got the money! Is venture capital the answer?
Most Indian VCs are not very aggressive, yet.
GOVERNMENT MUST ASSUME THE ROLE OF AN AGGRESSIVE VC Taiwan Singapore Research / Development Grants for IT Product Development
FINANCE FOR I.T. INNOVATION 2

Float a large VC Fund expressly for IT Product Development? Collateral-free loans. Low interest on such loans. Encourage Exim Bank to give low-interest loans
Priority Six
Encourage, Facilitate Design-based Manufacturing
Large-scale blue-collar employment
India : Manufacturing Superpower?

India can and will compete with developed countries / Taiwan / Korea / China ! Not simply low-labour-cost manufacturing
Value addition through R&D/innovation Design-based Manufacturing Rs. 50,000 crores Exports & 5,000,000 new jobs Stimulus to the manufacture of products in India. High Value-Addition
What can be done?

Encourage IT usage in Govt, business and education. Think BIG!
Allow unified manufacturing for exports/domestic markets; economies of scale.
Higher volumes pull down fixed and variable costs. Global + Local market
Low cost will allow access to lower end of domestic market which is many times larger than the current premium market >> higher volumes.
Enable an efficient supply chain

Stable policies Smooth procedures Infrastructure
Improve the velocity of business

Self declaration approach procedural not physical controls Reduce transaction times at ports and increase the operating periods. Flexible labour policy to manage global demand swings Reduce paperwork and rules e-governance, avoid multifarious tax systems.
Food for thought

Value addition
Move up the value chain; avoid becoming a labour commodity. Focus on Design and R&D activities and skill building. Academia and industry to work together in meeting global customer needs. Short term focus - services (contract manufacturing?) mid/long term focus products.
It is an achievable vision !!!

the recipe for success is
Start believing in our ability to innovate Take risks and think BIG !!! Think out-of-the-box Uniquely Indian Solutions for Uniquely Indian Needs Pride in Made in India >> Made in India, with Pride
Vision : Year 2008

India emerges as a true economic superpower. Widen scope from local market to global markets Entrepreneurs & medium corporates as economic driving force IT-driven national economy, educational system, communications, and governmentcitizen interface
New Mindset
The greatest waste of our natural resources is the number of people who never achieve their potential. Get out of that slow lane. Shift into the fast lane. If you think you cant, you wont. If you think you can, there is a good chance you will. Even making the effort will make you feel like a new man. Reputations are made by searching for things that cant be done, and doing them Aim low : boring Aim high : soaring!
LETS AIM HIGH

MAKE INDIA AN ECONOMIC SUPERPOWER OF THE WORLD
Thank you JAI HIND !

www.ncoretech.com vinay@ncoretech.com

Innovate or Perish: Vinay L Deshpande

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Indian high-technology for the world!

India Emerging Bangalore Management Association 10 September 2005

Indian high-technology for the world!

Indian high-technology for the world!

Did you know?

India is the largest producer of milk and sugar in the world?

Networked Readiness Index

Networked Readiness Index 2

Indian high-technology for the world!

High quality of Business Schools (8)

Reasonably high standard of Sci Research Institutions (20)

Yet, India has

A low rate of Technology Absorption (31)

BRAIN DRAIN ranking (based on percentage of population that

UTILITY PATENTS ranking

HIGH-TECH MANUFACTURED EXPORTS ranking

Indian high-technology for the world!

The Only Way Out

Encourage and nurture Innovation

No innovation: economic growth limited

Create an attitude for innovation

India : Tech Leader or ?

But, Im Not Creative

Dont be afraid to stumble

God dont make mistakes -- thats how he got to be God

Indian high-technology for the world!

Innovators do make mistakes lots of them

STD / ISD / PCO Booths

Internet access, too.

Uniquely Indian solution for uniquely Indian need

TVSe Tamil POS Tejas Networks

The Mobilis and SofComp

Dont be discouraged by detractors

Opportunities for India

Design / Innovation / Technology

Design / Innovation / Technology

Conventional Markets for Indian IT Companies

Software services for foreign clients

Facts to ponder over

Compare our $17 bn of software services export with that!

Initiatives for development of indigenous solutions for product requirements

HEALTH SERVICES Foetal Monitoring (Portable Ultrasound) Telemedicine

Clinical Decision Support System Patients bedside clipboard Health Statistics

More applications for the Indian Market

Crop data collection

Health statistics collection

Electricity Billing Ration-shop inventory control

Facilitate IPR Protection

The Age of INTELLECTUAL PROPERTY

Govt. can help create large public markets

US Government Support to Some Industries

Public / Private Partnership

Mission mode projects to stimulate industry

Promote Industry-Academia partnership

R&D for Defence / Public Sector

Commit production orders in addition to R&D contracts for new IT products

GOVT. SUPPORT FOR INNOVATION

GOVT. SUPPORT FOR I.T. INNOVATION 2

Encourage development of appropriate infrastructure

FINANCE FOR I.T. INNOVATION

FINANCE FOR I.T. INNOVATION 2

Encourage, Facilitate Design-based Manufacturing